The assignment of PT Agrinas Pangan Nusantara to operate the Merah Putih Cooperatives for two years will be regulated through a Presidential Instruction (Inpres). However, the introduction of this policy raised public concerns, as many believe the program’s foundation is not yet sufficiently sturdy, particularly the governance readiness in developing village cooperatives. Although intended to accelerate implementation, the policy has raised issues of accountability, verification quality, and village participation in the process.
A lecturer in Administrative Law at the Faculty of Law, Universitas Gadjah Mada (Law UGM), Dr. Richo Andi Wibowo, assessed that the assignment norm appears problematic and has the potential to create various governance issues.
“The assignment of Agrinas in the Presidential Instruction and the allowance for direct appointment constitute problematic norms. They are time bombs that may bring bitter consequences both now and in the future, rooted in a policy-making model that is rushed and overly instant,” he said in an interview on Wednesday (Apr. 15).
From the perspective of legal quality decision-making, he explained that public policy should maintain a balance between legality, effectiveness in achieving targets, efficiency in the use of funds, energy, and resources, and social legitimacy through public acceptance, particularly from affected communities.
However, he noted that Agrinas’ assignment to the Merah Putih Cooperatives has not fully met these four parameters.
“The aspects of legality, efficiency, and social legitimacy are not fulfilled, while effectiveness is achieved only narrowly, merely in accelerating target attainment,” he explained.
In terms of legality, he stated that granting privileges to state-owned enterprises (SOEs) must have a strong legal basis, in accordance with Article 33 of the 1945 Constitution, which emphasizes that monopolistic practices or privileges granted to SOEs must be legitimized by law, not merely by administrative policy.
“Article 33 mandates that the government should not arbitrarily grant privileges to SOEs. If an SOE is given a monopoly or special role, it must be based on legislation,” he said.
He further emphasized that the principle of “fair competition” under Article 33 serves as an important boundary, preventing the state from granting privileges without strong legal grounds. Although revisions to the SOE Law allow the government to grant monopoly rights through government regulations, he argued that this remains problematic, as it may fail to meet the legality principle by conferring significant authority without legal legitimacy proportional to the policy’s impact.
“Regulating privileges for SOEs at the level of government regulations is already problematic, let alone if it is only regulated through a Presidential Instruction,” he stressed.
From the efficiency perspective, he also viewed the policy as problematic due to the use of direct appointment mechanisms in procurement, which risk undermining competition and transparency. According to international regulatory standards, such methods are among the most vulnerable to corruption.
“Direct appointment is highly prone to corruption because of the lack of transparency and the absence of opportunities for other businesses to compete. As a result, public bodies have no basis for comparison in terms of price, quality, or qualifications,” he explained.
This condition further increases the potential for irregularities as accountability standards weaken. Moreover, following the government’s relaxation of procurement rules through policy revisions in 2025, the opportunity for deviations has become even greater. Rather than improving efficiency, the direct appointment scheme risks leading to costly, suboptimal procurement processes that are vulnerable to corruption due to minimal transparency and competition.
From the standpoint of social legitimacy, the policy’s standardized cooperative business model is also considered insensitive to the diverse needs of villages. A uniform approach risks being ineffective because each village has distinct economic characteristics.
“The government seeks to standardize business lines, even though village needs are highly dynamic and varied. Some villages require livestock-based cooperatives, yet these are not included in the prescribed scheme,” he said.
In one field case, he noted that a village focused on goat farming required a cooperative to support its livestock sector. However, this need was not among the seven priority programs set by the government, which included warehouse construction and health clinics. This mismatch has become a source of controversy, as villages are encouraged to adopt business models that are not fully relevant to their local economic needs. Consequently, cooperatives risk underperforming as they fail to address the primary concerns of rural communities.
“Without adequate participation and adaptation to local needs, this policy risks lacking strong social legitimacy from village communities as the directly affected stakeholders,” he added.
As a corrective measure, he emphasized the importance of a comprehensive policy evaluation in both the short and long term. In the short term, the government needs to review the legal basis of the assignment granting privileges to Agrinas. Improvements in procurement regulations are also essential to prevent recurring irregularities in program implementation.
“The Presidential Instruction containing privileged norms for Agrinas should be withdrawn. Agrinas may assist in development, but it should not be designated as the sole actor responsible for building 80,000 units of physical infrastructure for the Red-and-White Village Cooperatives. The tender process must remain competitive in accordance with sound procurement principles and international practices,” he asserted.
An approach that prioritizes speed without adhering to substantive procedures risks diminishing the overall quality of policy outcomes. Therefore, in the long term, he stressed that the government must exercise greater caution when designing public policies to avoid uniform, rushed approaches.
“The government needs to be careful in designing one-size-fits-all policies and avoid instant solutions, especially when the ‘compensation’ for haste involves cutting substantive procedures such as competition,” Richo concluded.
Author: Cyntia Noviana
Editor: Gusti Grehenson
Post-editor: Jasmine Ferdian
Photo: Wartakoperasi and Solopos